Tuesday, March 17, 2009

Deflation isn’t happening……

Universities' plan to double student fees could leave millions in debt into their 50s

''Tuition fees could be more than doubled under a blueprint to be put forward by universities today. Some students would find themselves with debts of £50,000 they could be paying off into their 50s. Middle-income families would be worst hit, as they would just miss out on financial support from bursaries, grants or means-tested loans.''

Posted by hpwatcher @ 06:16 AM (1073 views)
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8 thoughts on “Deflation isn’t happening……

  • japanese uncle says:

    For the next few years, majority of the graduates will not be able to find the kinds of job they expected at matriculation. Many end up as bar tenders, shop assistants, and above all, unemployed. Universities will be known as sheer waste of money. One university after another will be out of business. Such a clearly predictable process. Actually this is already happening.

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  • I wonder where they think the banks will find the money from, especially when you don’t have to start paying the loan back until you are earning over £18000 (I believe) and many will not get jobs. Good job property prices are falling and falling for good hopefully with the new FSA regulation set at 3x’s income.

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  • Eternal Sceptic says:

    Do those in ivory towers think they are immune to what is happening in the rest of the economy? Who wants a degree, when there is no propect of a job at the end of it.. They may even find their own jobs evaporate and the academic staff are scrabbling for jobs as shop assistants and part time workers in pizza hut.
    Bring it on I say!

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  • Can UK’s parents afford to put there children through Universities now, without an ever growing bubble of some kind?

    Is it now the case that we can’t live with bubbles, but equally we can’t live without them?

    Worse still, what happens to funding whilst a long u-bend bubble deflates with equity turning into negative?

    The decade of haves and the decade of nots. The generation gap is taking on another meaning!

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  • Nosy Parker says:

    japanese uncle, I’m not sure that you’re right. No university has ever gone bankrupt, though there have been mergers. Most have grown, some significantly. Student numbers were up last year and are due to go up again next year (2009-10). In 2007 a report from Universities UK (UUK) put the graduate premium, compared to those with just A-levels, at £160,000, others claim £400,000. See BBC, 17/02/07 for source.

    At present Britain is second is the world for the number of universities it has in the top 200 (after the US and before Australia) but the UK has a fairly low participation rate for percentage of its population it sends into higher education. Maybe we have to ask ourselves where the future jobs will be? Now China and India are very active economic players the global workforce has effectively doubled. It seems unliked the UK will be able to compete on the wages front for low skilled or even moderated skilled workers – high end work maybe the only place left for us, e.g. nuclear engineering, pharmaceuticals, education for international students, defence etc. If so, the requires a highly educated population.

    There’s potential for Britain to help educate a lot more international students, we offer a quality education, a stable country (at present!) and the English language. Nigeria has a rapidly growing middle class (all that oil). UK tends to be strongly their first choice. Nigerian student numbers are expected to grow from 3,000 to 30,000 or more. High fees, that’s a lot of much needed funding.

    ————————————————————-
    “Despite the recent expansion of higher education in this country, Switzerland and Turkey are the only European countries that still lag behind the United Kingdom, education figures for 24 industrialised nations disclose. Even when Britain reaches its target figure of one in three school leavers going into higher education, its participation rate will still be little more than half that of the United States. While 28 per cent of school leavers go into higher education in Britain, 65 per cent do so in the US, 53 per cent in Japan and 52 per cent in Australia.”
    http://www.independent.co.uk/news/uk/britain-still-trailing-in-higher-education-stakes-despite-an-expanded-student-population-numbers-are-half-of-those-in-the-us-1466254.html

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  • last_days_of_disco says:

    No, deflation is happening. What is going to happen is the University “Bubble” has to pop as well. Its just deflation isn’t a nice orderly hiss, its a series of bangs, ruptures and swellings, followed by bangs, but the overall trend is deflation. As japanese uncle points out, we don’t need a lot of the education “delivered” by these “Universities”, its a waste of time and money fueled by boom time economics.

    Cash in hand becomes far more valuable during deflation. All QE is doing is transferring the problem around, it will just pop up somewhere else. Bond market anyone?

    The fact is that credit deflation happens first then, depending on your political situation, you will get various responses in a fiat money system. One of those is hyper-inflation. I think its still too early to be sure which way the UK is going to go. The electorate will not be forgiving of anyone who causes hyper-inflation though, I am pretty sure of that.

    Labour is desperately trying to keep things going as long as possible before the real nasties start. But its the end game now.

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  • The Newdoctorwho says:

    I agree with a lot of what’s being said. I work in the Uni sector and for far too long, the degrees in pie making have been oh so popular because they are easy. I struggle to recruit students into Engineering, for which there are companies waiting at the door to employ our graduates. (Most have job offers in the easter before they graduate.) What we need is a return to the pre-92 era where the degrees that were on offer are the ones that are actually useful. I’m all for education for the sake of education but it you want a PhD in knitting then be prepared to pay for it.

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  • mountain goat says:

    I suspect this has come up because UK Universities attract a lot of international students. The devalued pound means these students can be tapped for more, since UK education must now be a bargain when priced in USD.

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